Higher oil prices are here to stay: IEA

Slowing in leading countries will moderate thirst for oil, but high prices are not the result of speculation alone and are here to stay, the International Energy Agency (IEA) said yesterday.

The day after the oil price topped US$107 a barrel for the first time, the IEA said: "We are in an era of higher oil prices. So if we look at US$100 per barrel of oil we have to do so with an understanding that prices are unlikely to return to levels seen in the early part of this decade."

The IEA said in its monthly report that it was holding its estimate for world oil demand this year at 87.5 million barrels per day "with downward pressures from weaker economic growth in [members of] the OECD [Organization for Co-operation and Development] mostly offset by stronger former Soviet Union projections."

This estimate was an increase of 1.7 million barrels per day or 2.0 percent from demand last year which grew by 1.1 percent.

World of oil rose by 185,000 barrels per day last month to 87.5 million barrels per day but an increase in output by OPEC in January had raised the base line.

"Seasonal limits on OECD production and steady OPEC output may flatten global supply over the next two months," the IEA said.